Section 255(3) – Power of Single Member Bench to hear a case does not depend upon the quantum of addition or disallowances impugned in appeal but on the total income assessed by the AO being upto Rs. Five lakh.
Facts:
The assessee filed its return of income declaring gross total income/business income of Rs. 8,55,068. However, the Assessing Officer (AO) assessed the gross total income of the assessee, before set off of brought forward business loss at Rs.31,41,645. The total income assessed after set off of brought forward business loss was Rs. 4,83,017 and thus well under Rs.5,00,000 threshold limit of assessed income as specified in section 255(3). However, the dispute involved involved in the appeal and the cross objections involved much higher amounts, in excess of that limit.
In view of the above mentioned facts, a question arose as to whether the matter could be heard by Single Member Bench or should it be referred to a Division Bench.
Held:
In terms of section 255(3) the criterion, so far as class of matters which can be heard by SMC Bench, is concerned is only with respect to the assessed income, i.e., total income as computed by the Assessing Officer (AO). The Single Member Bench has the powers to hear any case, which is otherwise in the jurisdiction of this Bench, pertaining to an assessee whose total income as computed by the AO does not exceed Rs.5,00,000 irrespective of the quantum of the additions or disallowances impugned in the appeal.
Once SMC Bench has the powers to hear such an appeal, it is only a corollary to these powers that the Bench has a duty to hear such appeals as well. The reason is simple. All the powers of someone holding a public office are powers held in trust for the good of public at large.
There is, therefore, no question of discretion to use or not to use these powers. It is for the reason that when a public authority has the powers to do something, he has a corresponding duty to exercise these powers when circumstances so warrant or justify.
Having held that a SMC Bench has the power, as indeed the corresponding duty, to decide appeals arising out of an assessment in which income assessed by the AO does not exceed Rs.5,00,000 it may be added that ideally the decision to decide as to which matter should be heard by a Division Bench should be determined on the basis of, if it is to be based on a monetary limit, the amount of tax effect or the subject matter of dispute in appeal rather than the quantum of assessed income.
There seems to be little justification, except relative inertia of the tax administration in disturbing status quo in the policy matters, for the assessed income as a threshold limit to decide whether the appeal should be heard by the SMC Bench or the Division Bench, particularly when, for example because of the brought forward losses, underneath that modest assessed income at the surface level, there may be bigger ice bergs lurking in the dark representing high value tax disputes, adjudication on which may benefit from the collective wisdom and checks and balances inherent in a Division Bench.
However, as the law stands its assessed income which matters and not the tax effect or the quantum of disallowances or additions, impugned in the appeal. All that is relevant to decide the jurisdiction of the SMC Bench is thus the assessed income and nothing other than that.
